The Vancouver-based company wants to acquire all of CanniMed's issued and outstanding stock in an all-share deal worth up to $24, or about 3.7 Aurora shares per CanniMed share based on Aurora's closing price of $6.41 Tuesday. CanniMed's shares closed at $15.30 Tuesday.

CanniMed shareholders would hold about 16 per cent of Aurora's shares if the deal is completed.

Aurora said it submitted a proposal to CanniMed's board of directors Monday and has given the company until Friday to respond. If the board doesn't respond, Aurora plans to launch a formal takeover bid.

"We're definitely hoping that we can combine forces here in the friendliest possible way," Cam Battley, Aurora's executive vice-president, said in an interview.

Aurora said it has entered into agreements with shareholders representing 38 per cent of CanniMed's outstanding shares to support its bid. The company disclosed the proposal at the request of the Investment Industry Regulatory Organization of Canada, which halted Aurora shares earlier Tuesday.

Shares of Aurora have shot up more than 30 per cent on the back of its earnings last week that showed a 169 per cent jump in revenues in the quarter ended Sept. 30, and $1.2 million in sales of dried cannabis in Germany.

Battley said the transaction to buy the Saskatoon-based producer "absolutely makes sense" as the company readies to move to the next level.

The acquisition would boost Aurora's market capitalization to more than $3 billion and would see it serve about 40,000 active registered patients. That compares to 63,000 at Canopy Growth Corp. (TSX:WEED), Canada's largest marijuana company.

"This is all about creating a fully integrated, globally dominant cannabis company and that's what we can achieve together," Battley said.

Canadian marijuana companies have ramped up production capacity ahead of Canada's deadline for the legalization of recreational cannabis next summer and worked to extend their reach outside the country's borders over the last financial quarter.

Some analysts have been predicting a wave of consolidation among the around 50 licensed producers in the burgeoning industry ahead of legalization.

CanniMed, previously Prairie Plant Systems, was one of the first medical marijuana companies to be granted a Health Canada licence to produce in 2013.

Prior to that, Prairie Plant Systems had been the government’s official marijuana provider on the earlier program enacted in 2000.

The company is focused on cannabis oil, a higher-margin product than dried bud.